Relationship Marketing

of Services

Group Members: Susan Connell

Louise Considine
Justin Farrell
Jacinta Smith
Introduction
 Intense rivalry led to shift from transactional to
relational marketing
 “relationship marketing is to identify and
establish, maintain, and enhance relationships
with customers and other stakeholders, at a profit,
so that the objectives of all parties are met”
(Grönroos, 1990, p. 10).
Differences between TM and RM
Implications: Transactional Relationship
 
Time perspective: Short term focus Long term focus

Price elasticity: Sensitive to price Less sensitive to price

Dominating quality Quality of output Quality of interactions

dimension: (technical quality) (functional quality)

Measurement of Monitoring market share Managing customer

customer satisfaction: (indirect approach) base (direct approach)
Customer information Ad hoc customer surveys Real-time customer
system: feed back systems
Interdependent between Interface or no or limited Interface of substantial
marketing operations strategic importance strategic importance to
and personal: success
The role of Internal No or limited importance Substantial strategic
Marketing: to success importance to success
Organisational Consumer
Benefits Advantages
 Cheaper to keep  Overcomes risk &
existing customers ambiguity of
than to attract new
complex services
clients
 Reduced costs  Confidence
 80:20 rule benefits
 Not all customers
have equal value  Social rewards
 Lifetime value of
customers
Goals of Relationship Marketing
 ..“build and maintain a base of committed
customers who are profitable for the
organization” (Zeithaml and Bitner, 2003,p.158).

 Acquisition, retention & enhancement

 Relationship marketing ladder of loyalty

RM Ladder of Loyalty
 Relationship of partner

 Actively recommends you

 Supports you passively

 Repeat business, but

passive or negative attitude

 Carried out one transaction

 Potential customer
Appropriateness of RM
 Does the customer want a relationship?

 Is the customer segment profitable enough to

justify the expense?

 Will forming a relationship with a customer or

customer segment adversely affect the company,
its employees or other customers?
Customer Profitability Segments
 Used to segment customers based on
estimated profitability to the company
8
Figure 17-
17-7
SM The Expanded Customer Pyramid

Most Profitable
What segment spends more with
Customers Platinum us over time, costs less to maintain,
spreads positive word of mouth?
Gold

Iron

What segment costs us in

Lead time, effort and money yet
does not provide the return
Least Profitable we want? What segment is
difficult to do business with?
Customers

McGraw-Hill © 2000 The McGraw-Hill Companies

 Implementation
 A review of the relationship marketing literature suggests a lack
of knowledge and action surrounding the issue of
implementation of relationship marketing strategies.

 This lack of action can be attributed to:

1. The failure to recognise the synergy and interdependency

between relationship marketing and niche marketing.
2. The lack of use of relationship marketing.
3. The lack of top management commitment to change the company
to successfully implement relationship marketing strategies.
 Approaches to Implementation
Berry (1983): Shani and Chalasani (1992):
1. develop a core service around
which to build a customer
relationship. 1. Pursue a niche marketing
strategy to identify a gap in the
market.
2. customise the relationship to
the individual customer.
2. Build up a customer
3. augment the core service with database.
extra benefits.
3. Focus on relationship
4. price services to encourage marketing activities.
customer loyalty.

5. market to employees so that

they, in turn,will perform well for
customers.
 Approaches to Implementation contd..
 Voss and Voss (1997):
…suggest, “successful implementation of a relationship marketing program
requires a complement of marketing strategies that satisfy and motivate
customers through the four phases of relationship development” (p. 290).
(awareness, exploration, expansion and commitment)

 Dodge and Fullerton (1997):

1. choose the right customers i.e. the profitable ones.
2. find ways to deliver superior value to these customers.
3. personalisation of the relationship

 Successful when… “the marketer and the customer abandon their adversarial
role behavior in favor of some form of partnership or alliance” (Dodge and
Fullerton 1997, p. 5).  
 The reasons why relationship marketing fails
Nelson and Kirkby (2001) believe there are seven key reasons:

1. Data is ignored
2. Politics rule
3. The IS organisation and business users cannot work together
4. There is no plan
5. Relationship marketing is implemented for the company and
not the customer
6. A flawed process is automated
7. No attention is paid to skill sets
 To Conclude…
 Emerged due to awareness of the importance of relationships in services and
of increasing consumer expectations.

 Relationship marketing is reforming the way service firms are conducting

business.

 In order to remain competitive companies must embrace the philosophy of

relationship marketing.

 Relationship marketing is beneficial to both organisations and customers.

 It is essential for a company to segment its customers on the basis of their

profitability, as resources should be allocated on this basis.

 There is no universal remedy for implementing relationship marketing

strategies successfully.